Chapter 4. The strategic framework and policy delivery system in Israel1

This chapter examines the strategic framework and delivery arrangements for SME and entrepreneurship policies in Israel. Although many ministries and agencies have relevant policy interventions, there is no integrated, government-wide SME and entrepreneurship policy strategy. The government should craft a single strategic policy document which lays out the vision, objectives, target groups, policy measures and budgets dedicated to the support of SMEs and entrepreneurs in Israel. The SMBA is tasked with policy coordination across the government. It could be strengthened in this role by creation of an inter-ministerial committee and an inter-ministerial working group together with more adequate resources for policy coordination. The SMBA’s network of MAOF business development centres is a critical part of the delivery infrastructure for SME and entrepreneurship policy in Israel. They could play a greater role in the future by delivering additional services and reaching out to more SMEs and entrepreneurs. This should be accompanied by strengthened performance monitoring and staff development in the MAOF Centres.

The strategic policy framework

Israel has gained a global reputation as a “start-up nation” (Senor and Singer, 2009) based on its success in promoting, encouraging, and supporting high-technology enterprises. This was driven by policy initiatives that began in the 1990s to attract multinational corporations to establish research and development (R&D) centres in Israel, foster the R&D activity of Israeli firms, support Israeli high-technology start-ups with R&D funds and technological incubators, stimulate the development of a venture capital industry for investment in high-technology enterprises, and promote R&D linkages between industry and academia. The well-developed policy focus on the high-technology sector continues to this day.

The Israeli government also began to develop SME and entrepreneurship policies in the early 1990s, mostly in response to the need to absorb the influx of Jewish immigrants from the former soviet areas into the workforce and take advantage of their scientific and technological skills. This included establishment of the Small and Medium Business Authority as a non-governmental entity with government funding support, which launched SME support programmes and services and advised the government on policies to support traditional SME sectors. However, for many years, the government’s policy priority was concentrated on high-technology sectors, with relatively small attention to the broader issues of developing SMEs in traditional sectors.

Policy attention to SME development strengthened in the late-2000s. In 2007, the government adopted Resolution No. 2190 concerning the improvement and targeting of aid for SMEs. On the basis of this resolution, the Small and Medium Business Agency (SMBA) was created within the Ministry of Economy and Industry in 2009, replacing the non-governmental Small and Medium Business Authority. In 2011, government Resolution No. 3409 on encouraging SMEs’ activities in Israel authorised the SMBA to co-ordinate all government action in the promotion of SMEs and to initiate and implement related activities. The policy agenda to be covered included:

the supply and availability of credit to SMEs;
collecting and disseminating information critical to the promotion of SMEs’ activities;
streamlining regulatory processes affecting the creation and operation of SMEs and reducing the regulatory and administrative burden;
realising the productivity and innovation potential of SMEs;
improving the capacity and capabilities of SMEs to export; and;
increasing the participation of SMEs in government procurement.

Holding the mandate for SME and entrepreneurship development, the Ministry of Economy and Industry highlights its importance in recent work plans, listing “strengthening SMEs” as one of its core objectives, alongside a range of other policy activities relevant to the support of SMEs and entrepreneurship, including increasing competition in the economy, enhancing the skill base of the workforce, and diversifying export activity. Specific to the objective of “strengthening SMEs”, the 2016 work plan aims to remove access barriers to credit and capital; ease and reduce regulatory and bureaucratic barriers on business; assist SMEs in realising their potential in productivity, innovation, efficiency and competitiveness; and create a supportive infrastructure for the establishment of new businesses and their development.

The Ministry of Economy and Industry primarily tasks its SME and entrepreneurship policy activities to the Small and Medium Business Agency (SMBA), established in the Ministry in 2010. The Agency has the responsibilities listed in Box 4.1.

Box 4.1. Functions of the Israeli Small and Medium Business Agency (SMBA)

To initiate and implement government policies to assist SMEs;
To design and run SME assistance programmes;
To co-ordinate all the organisations involved in promoting the SME sector;
To establish local and regional centres dedicated to SMEs;
To introduce legislation pertaining to SMEs;
To implement guidance, public relations and educational programmes for the management of SMEs;
To fulfil research and surveys on the sector and establish useful databases;
To create additional funds and vehicles of assistance;
To lobby both publicly and privately to eliminate obstacles facing entrepreneurs;
To encourage entrepreneurial potential among specific segments of the population, such as minorities.

Source: Regulations setting up the SMBA from the Ministry of Economy and Industry website: www.moital.gov.il/NR/exeres/54A8A7EB-8526-43E1-A8EA-210513B20FE6.htm.

In 2011, the SMBA produced a 3-year strategic plan that focused on the following three main tasks for the Agency (Adalya Economic Consulting, 2011):

The operation of local development centres charged with transferring information and knowledge to SMEs (i.e. the MAOF network of business support centres).
The management, in collaboration with the Ministry of Finance, of the loan guarantee programme (Small and Medium Business Fund).
The review of legislation affecting SMEs with a view to alleviating regulatory burdens.

To improve its ability to fulfill its role, the SMBA was also to be tasked with gathering all activities under the Ministry of Economy and Industry having to do with assistance to SMEs (e.g. exporting, innovation, skills), involvement in all significant decisions regarding state guarantee funds in co-operation with the Ministry of Finance, and improving baseline data on SMEs to be able to monitor the effectiveness of SME supports in meeting their needs. The strategic plan also recommended a simplification in the range of SME and entrepreneurship programmes. However, the SMBA strategy was not a comprehensive government-wide SME policy framework, but rather an initial analysis of the most pressing issues and tasks for the Agency itself.

Entrepreneurship and SME-related policies are also within the scope of other ministries and agencies. For example, the government is implementing policies to stimulate SME and entrepreneurship development among underprivileged segments of society, including immigrants and minority populations (i.e. Arab, Druze and Circassian populations), which are driven by the Ministry of Immigrant Absorption and the Agency for Economic Development of the Minority Sectors (MEDA) in the Ministry of Social Equality. The SMBA co-operates with these bodies in implementing the policy support. Other examples are policies to encourage the unemployed and job-seekers to become self-employed, which are operated by the Employment Service, and policies to stimulate and strengthen SME development in the agricultural and tourism sector, which are operated by the Ministry of Tourism and the Ministry of Agriculture and Rural Development. Procurement policy is governed by the Mandatory Tenders Law under the Ministry of Finance, which includes provisions to increase the chances of SMEs being able to compete for public procurement contracts, but with no specific targets for the allocation of public tenders to SMEs. The Ministry of Finance is also involved in setting policies to improve the ability of SMEs to access financing, such as through the SMBF, the Angels’ Law, and the funding of micro-credit organisations. Thus, although the support of SMEs and entrepreneurship is evident in the overall governmental agenda and consistent with policy prescriptions in major international SME policy guides such as the Small Business Act for Europe (European Commission, 2008) and the OECD Bologna Charter on SME policies (OECD, 2000), with particular strengths in policy to support high-technology sectors and businesses, Israel does not have an integrated policy document which sets out its strategic policy framework for SME and entrepreneurshipdevelopment.

Going forward, the SMBA should craft a new medium-term strategic plan (e.g. for the next three or five years) to be used not only to determine its own more narrowly-defined scope of work but also to frame an overarching SME and entrepreneurship policy strategy for the government as a whole. This document should include objectives, target groups, description of policy measures, budgets and responsibilities of the various ministries and government departments and agencies in relation to the strategy.

The strategy should set out a comprehensive set of policies (e.g. access to finance, entrepreneurial, managerial and workforce skills development, innovation, access to markets, etc.) and show how they will be applied to different enterprise policy target groups. This could follow a “pipeline approach” identifying the financial and non-financial supports to be applied to entrepreneurs from different population groups and at different phases of the entrepreneurial process, and enterprises at different stages of business development, e.g. distinguishing between potential entrepreneurs, start-ups, early-stage business development, established micro and small enterprises, established medium enterprises, and high-growth potential firms.

One of the inputs to the strategy making process could be the key priorities for government intervention identified in this report. The task of the SMBA, in collaboration with other departments of the Ministry of Economy and Industry and other relevant ministries, will be to translate these and other priorities into a specific SME and entrepreneurship development strategy.

Coordination across government ministries and agencies

Although the SMBA is the main government entity responsible for support to SMEs and entrepreneurs, other branches of the Ministry of Economy and Industry and other ministries also implement policies and programmes to support SME and entrepreneurship development. Table 4.1 provides an overview of the main government institutions involved in SME and entrepreneurship policy in Israel.

Table 4.1. Israeli ministries and agencies involved in SME and entrepreneurship policies and programmes
Ministry/Agency	SME and entrepreneurship policy areas
Small and Medium Business Agency (SMBA) – Ministry of Economy and Industry	The Ministry of Economy and Industry has the overall mandate for SME and entrepreneurship development, which is delegated to the SMBA. The SMBA focuses on improving access to finance and know-how and reducing regulatory and administrative barriers to starting and operating a business. It administers the Small Business Loan Fund (a loan guarantee fund), together with the Ministry of Finance, and the network of local business development services (MAOF) centres.
Israel Innovation Authority (IIA)	The IIA (which replaced the Office of the Chief Scientist in January 2016) is empowered by a 2015 amendment to the 1984 Law for the Encouragement of Industrial Research and Development (R&D Law), oversees government-sponsored support of R&D in Israel. It implements the R&D Fund and supports the Technological Incubators Programme.
Foreign Trade Administration (FTA) – Ministry of Economy and Industry	The FTA is responsible for managing and directing Israel’s international trade policy, including activities for the promotion of trade and export, initiating and maintaining trade agreements, and creating strategic co-operations with foreign companies. Its aim is to increase export volumes by Israeli firms and diversify exports towards new emerging markets, e.g. China and India.
Israeli Investment Center – Ministry of Economy and Industry	Its main responsibility is encouraging the development of industry and tourism in Israel. It offers taxation incentives and government grant schemes to support private investment and job creation activity in peripheral regions. Since 2014, it has adopted a special investment focus on investment projects with an expression of innovation for increased productivity and relatively high paying jobs.
Ministry of Finance	It manages policy initiatives to improve access to financing for SMEs. This includes joint management with the SMBA of the Small Business Loan Fund (a loan guarantee fund) and the Angels Law to incentivise private investments in new high-technology start-ups.
Ministry of Immigrant Absorption	The Ministry facilitates the full integration of immigrants and returning residents into society and absorption into the labour market. It Entrepreneurs Division works to incorporate new programmes into the overall policies of the Ministry to support new immigrants and returning residents in establishing and developing independent businesses in Israel. It offers a special track for establishing start-ups in the sciences and hi-tech in Israel.
Authority for Economic Development of the Minorities Sector (MEDA) – Ministry for Social Equality	Its mandate is to maximise the economic potential of minorities (Arabs, Druze and Circassian sectors) and integrate the minority business sector into the economy. It runs policy measures to increase access to financing, markets and know-how for minority-owned SMEs and nascent entrepreneurs from minority populations. It also promotes development of tourism businesses in Arab villages in partnership with the Ministry of Tourism.
Ministry for Development of the Negev and the Galilee	The mandate of the Ministry involves spreading economic development to the peripheral regions primarily through developing industrial zones and incubators to stimulate enterprise development in the Negev and Galilee, and encouraging entrepreneurs and investors to shift their economic activity to the these regions.
Ministry of Interior	This Ministry is responsible for business licensing and permits. It currently cooperates with the SMBA on interventions to reduce the complexity of the permit and licensing system at the municipal level.
Ministry of Agricultural and Rural Development	It has the mandate to support the agricultural sector by promoting agricultural development and agricultural exports. It provides financial aid to help agricultural SMEs prepare business plans and develop their activities.
Ministry of Tourism	One of its policy objectives is to stimulate start-ups and the development of SMEs in the tourism sector through the provision of grants and subsidised consultancy services.
Ministry of Defence	The Ministry manages measures to promote new ideas and technologies that can serve both military needs and future commercial applications in partnership with the OCS and the Ministry of Finance. It recently established a Business Development and SME Department as part of its International Defence Co-operation Division (SIBAT).
The Employment Service	It assists the unemployed and job-seekers to gain employment. Its activities include self-employment assistance by way of mentoring, training, and help with preparing business plans.
“Digital Israel Office” – Ministry for Social Equality	Supports the use of digital technologies across the economy including e-government for the provision of public services and e-commerce and other digital technology use in SMEs.
Source: OECD based on information submitted by the SMBA, MEDA and Israeli government website information.

Because SME and entrepreneurship policy is horizontal, transcending the scope of any one ministry or agency, managing a national SME and entrepreneurship policy agenda requires co-ordination to stave off risks of fragmentation and duplication. The coordination of SME and entrepreneurship policy is one of the functions assigned to the SMBA but needs to be strengthened. There is not a formal mechanism in place for this purpose and in practice the SMBA has only been able to achieve a limited amount of policy coordination, primarily due to the lack of sufficient authority and resources to perform the role effectively.

Because SME and entrepreneurship policy is horizontal, transcending the scope of any one ministry or agency, managing a national SME and entrepreneurship policy agenda requires co-ordination to stave off risks of fragmentation and duplication. The coordination of SME and entrepreneurship policy is one of the functions assigned to the SMBA. However, there is not a formal mechanism in place for this purpose and in practice the SMBA has only been able to achieve a limited amount of policy coordination.

One of the barriers hampering better SME and entrepreneurship policy prioritisation and achievement of greater policy synergies across government is that the SMBA is not a full-authority Agency. The authority granted to the Agency under government resolutions No. 2190 (2007) and No. 3409 (2011) is general and vague, without being specific about its granted authorities to effectively address structural problem affecting SME and entrepreneurship development. These government resolutions do not enable the positioning of the Agency as an authoritative entity within the government that is able to design long-term policy and provide efficient and effective assistance to SMEs. For example, it has not been “legislated” with the authority it needs to achieve certain parts of its mandate, particularly relating to regulatory and legislative issues affecting SMEs, co-ordination of SME support across government (e.g. ensuring receipt of information relating to SMEs from any government ministry operating support programmes, including details of the plan, device, and businesses receiving the support), setting binding uniform SME definitions for all stakeholders, and advocacy matters to ensure that the interests of SMEs are respected by all government departments and authorities and that the procedures and actions of state authorities are not having a harmful effect on SMEs. Administratively dependent on the Ministry of Economy, the SMBA lacks weight in efforts to co-ordinate all government policy actions affecting SMEs as it does not have the legitimacy needed to influence other ministries and agencies, compared to an autonomous agency.

In practice, the SMBA has found it difficult to affirm its central role in SME and entrepreneurship policy even among other departments of the Ministry of Economy and Industry, let alone with other ministries. In addition, most of the other ministries and agencies do not have an SME focal point to internally champion the SME and entrepreneurship perspective in their policies and programmes and to facilitate liaison with the SMBA, which also hinders co-ordination.

A new SME Bill, introduced in 2014 and still under discussion by the Knesset, would grant the SMBA the legal statutory standing to be the official government body responsible for SME and entrepreneurship policy and provide the relevant authorities to the SMBA to fulfil its core roles of policy co-ordination, representing the interests of SMEs within the government, reviewing regulations with an impact on SMEs, and initiating legislation relative to SMEs’ interests (Box 4.2). If implemented, the SME Bill may well result in a stronger SMBA.

Box 4.2. Authorities to be granted to the SMBA under the proposed SME Bill

Strategy planning: To assist the government on planning a multi-year SME government policy in regards to SMEs and report to the government, at least once a year, on the state of the SME sector and related policies;
Policy co-ordination: To consult any public entity which assists SMEs in order to co-ordinate and promote the interests of the SME sector as a whole;
Advocacy: To advocate for SMEs within the public sector; for example, the SMBA will be authorised to transfer complaints and appeals made by SMEs about burdensome or discriminatory regulations to the relevant government department and to offer its assistance on alternative more SME-friendly regulations;
Legislative process: To review proposed government resolutions to assess the administrative and cost impact on SMEs and to provide recommendations on legislative amendments and government resolutions affecting the life of SMEs;
Regulatory impact assessment: To examine existing administrative burdens on SMEs and advise on methods to minimise them;
Analysis: To create and manage a public database on the SME sector and conduct relevant research; in this regard, the SMBA is authorised to request and receive any information from public authorities needed to fulfil this duty.

Source: OECD based on the English translation of the Hebrew text of the SME Bill provided by the SMBA, 2014.

Policy co-ordination across government could be further enhanced through the establishment of an inter-ministerial SME and entrepreneurship policy committee. This is an approach that is common in many countries (see example in Box 4.3), but does not exist in Israel. Initially, when the SMBA was first established, it was intended to be supported by a higher-level Steering Committee consisting of the Ministry of Finance, the Ministry of Economy and Industry, and two stakeholder organisations. However, this Committee has never been activated.

Box 4.3. The Inter-ministerial State Council on Small and Medium Enterprises and Entrepreneurship, Spain

Description of the approach

The State Council on Small and Medium Enterprises and Entrepreneurship is attached to the Spanish Ministry of Industry, Energy and Tourism. It is the official body for the planning and co-ordination of all the policies and measures of the various ministries and public administrations affecting SMEs and entrepreneurship, including the facilitation of their creation, growth, and competitiveness. It aims to foster dialogue and co-ordination and includes representatives of all the relevant ministries as well as representatives of SMEs.

The Council was created and is regulated by Royal Decree 962/2013, approved by the Council of Ministers on 5 December 2013. It is responsible for: informing the multiannual SME support plan; developing recommendations and proposals on priorities, mechanisms, actions and regulatory changes necessary to increase SME activity and competitiveness as well as entrepreneurship in Spain; co-ordinating the various support programmes carried out by the competent bodies and the harmonising the eligibility criteria and service standards for support to SMEs; monitoring the application of the Small Business Act for Europe in Spain to enable the evolution of policies for SME access to finance, internationalisation, public procurement, ICT adoption, and reducing administrative burdens affecting SMEs; promoting entrepreneurship in the media, educational settings and society in general; and reporting on regulatory projects and improvements.

The Council is chaired by the Ministry of Industry, with the General Secretariat of Industry and SMEs and the Directorate General of Industry and SMEs each holding vice-chair positions. Its consists of 52 members: 13 members representing ministerial departments of the General Administration of the State (e.g. Ministry of Justice, Ministry of Finance and Public Administration, Ministry of Education, Ministry of Agriculture, Ministry of Foreign Affairs and Co-operation, Ministry of Employment and Social Security), eight representatives of State agencies (e.g. State Society for the Management of Innovation and Tourism, Centre for Development of Industrial Technology, Spanish Patent and Trademark Office, Spain Export and Investment, Official Credit Institute), one representative from each autonomous region, representatives of local governments, business and labour organisations representing SMEs, and the Council of Chambers of Commerce and Industry.

The Plenary body of the Council is composed of all members and acts as a consultative and advisory body on all matters affecting SMEs and entrepreneurship. It promotes dialogue amongst public administrations and economic and social agents in order to provide greater rationality and efficiency to SME and entrepreneurship policies and to formulate proposals for actions by the public authorities and intermediate agents to improve the growth, efficiency and productivity of SMEs. It meets at least once a year.

The Standing Committee of the Council, chaired by the Directorate General of Industry and SMEs, comprises representatives from the Ministry of Industry and the Ministry of Economy and Industry and Finance. It is responsible for co-ordinating and enforcing the work approved by the Plenary body. The Plenary body is also empowered to establish working groups to carry out the functions of the Council.

Relevance to Israel

The establishment of such an inter-ministerial council in Israel would foster a higher level of co-ordination of SME and entrepreneurship policies and measures at the national level and provide great benefit to the SMBA in carrying out is policy development and co-ordination responsibilities.

Sources for further information

Website on the State Council on Small and Medium Enterprises, Spain: www.ipyme.org/es-ES/PoliticasMedidasPYME/ConsejoGeneralPYME/Paginas/ConsejoEstatalPYME.aspx/.

The Ministry of Economy and Industry could consider reviving and broadening the mandate and membership of this higher-level steering committee to co-ordinate all public policies and measures affecting SMEs and entrepreneurship in Israel, with representation from all the relevant ministries and agencies. The Committee could be chaired by the Minister of Economy and Industry and should meet at least twice a year to discuss SME and entrepreneurship policy priorities and objectives and agree a work plan (e.g. an annual SME and entrepreneurship policy action plan) to achieve those objectives, with functions very similar to those of the State Council on Small and Medium Enterprises and Entrepreneurship in Spain (Box 4.3). The SMBA could perform the role of secretariat functions to the Committee. One of its first tasks could be drafting a national SME and entrepreneurship strategy document. It also needs to undertake a range of research, analysis, evaluation and consultation to inform policy development and prioritisation.

The Inter-ministerial Committee should also work closely with the Knesset’s Small Business Sub-Committee, which is part of the Finance Committee although, in this regard, it would also be advisable for the Knesset to set up a full SME Committee with a broader mandate than small business financing.

At a more operational level, cross-ministerial co-operation in Israel would also be strengthened by the creation of an SME and Entrepreneurship Policy Working Group, represented by SME focal points in each relevant ministry and agency. Such a working group, which could be chaired by the SMBA, could meet monthly or bi-monthly to discuss policy issues affecting the development of SMEs and entrepreneurship in the country, share information on approaches, and identify opportunities for co-operation and collaboration. The establishment of such a working group, together with an inter-ministerial committee, would go a long way in kick-starting a government-wide approach to SME and entrepreneurship policy that encompasses all the relevant departments of the Ministry of Economy and Industry as well as other ministries with programmes in support of SMEs and entrepreneurs, and enable the SMBA to more effectively and legitimately carry out its co‐ordination role.

As well as strengthening the legal authority of the SMBA and establishing formal SME policy co-ordination mechanisms, it is necessary to correct the small scale of the existing financial and human resources of the SMBA compared with the tasks it needs to carry out (co-ordinating policy measures, delivering certain programmes directly and advocating for regulatory improvements). The SMBA has five divisions which cover financing (i.e. primarily the loan guarantee scheme), research and international relations, government regulations, the MAOF network of business development centres and corporate services (internal systems, ICT, etc.). However, with a staff of only 20 in 2016, comprising 6 professionals and 14 administrative assistants, the SMBA is clearly under-resourced. For example, the SMBA is asked to prepare opinions on the impact on SMEs of Knesset Bills on a weekly basis, whereas the regulation division of the SMBA is staffed with only one professional, who is therefore left with little time for proactive efforts to advocate for SME-related improvements in existing legislation, such as pushing for implementing the SME Test as part of the Regulatory Impact Assessment (RIA) regime. More staff resourcing is therefore needed to enable the SMBA to play a stronger role.

Furthermore, the SMBA does not have a secure annual programme budget but instead receives an annual allocation from the Ministry of Economy and Industry, which was approximately NIS 215 million in 2015.2 In order to facilitate the SMBA’s programme planning and reduce the uncertainty around year-to-year funding of SME support programmes, the SMBA should be allocated a multi-year budget. To take this forward, the SMBA’s next three-year SME strategy can be used to determine the scale of the multi-year budget needed for the SMBA and its allocation to the specific policy pillars outlined in the SMBA strategy. The funding of the MAOF centres represents a good practice – the Ministry of Finance provided the SMBA with a three-year budget of NIS 195 million for the MAOF Centres in 2013-15. This multi-annual approach should be spread to other SMBA activities.

Dialogue with SMEs and entrepreneurs

It is good practice in SME and entrepreneurship policy that the government initiates a dialogue with representatives of SMEs and entrepreneurs to ensure that the concerns and needs of small business owners are effectively reflected in public policy making (OECD and UNIDO, 2004). Many OECD governments have therefore established SME advisory committees to allow for a structured dialogue between the government and representatives of the SME sector. The membership of these committees is generally broad, including chambers of commerce, small business associations, SME support organisations, and independent experts (see the example from Ireland in Box 4.4).

Box 4.4. Example of a SME Advisory Committee, Ireland

The Advisory Group for Small Business (AGSB) in Ireland, was established by the Ministry for Small Business in June 2011 as a forum to facilitate structured and regular dialogue between the government and representatives of the small business sector and to provide policy advice for onward reference to government on the key issues affecting the development and growth of the SME sector and possible solutions. The 17-member body consists mainly of entrepreneurs, nominees from the main small business and sector representative bodies, Startup Ireland, officials from the Department of Jobs, Enterprise and Innovation, the state enterprise support agencies, Enterprise Ireland, and the Credit Review Office.

The first task assigned to the Group was to carry out consultations to develop an action plan for small business, which they submitted to the Minister for Small Business in November 2011. The group has been active in promoting entrepreneur-friendly policies and procedures and has made submissions regarding the budgetary policies adopted by government in the budgetary process over the last number of years. It has also provided direct feedback on a number of proposals that had an impact on entrepreneurship.

Source: Website of the Advisory Group of Small Business, www.djei.ie/en/What-We-Do/Supports-for-SMEs/Advisory-Group-for-Small-Business/.

In Israel, the SMBA has formed an ad-hoc consultative advisory committee on SMEs consisting of representatives from four major business associations. Although the committee does not have an official mandate and role, the business associations have been consulted on a number of occasions on issues affecting SMEs. In particular, valuable inputs have been provided on regulatory reforms with an impact on SMEs. Going forward, the SMBA could establish a more formal consultation mechanism with SMEs and entrepreneurs. This could follow the format of a series of forums with SMEs and entrepreneurs organised by the SMBA to solicit opinions and input on government regulations and policies.

The programme portfolio and mix

Israel has a well-developed policy to support the R&D activity of high-technology businesses and to provide the framework conditions in which they can thrive. At the same time, its support for non-technology based start-ups and SMEs is relatively weak, including the scale of programme support for non-R&D based innovation, new business creation in non-technology fields, promoting the growth of traditional SMEs, supporting young entrepreneurs and promoting entrepreneurship in the education system. SMBA can support a number of important programme measures in these areas, both directly and by encouraging other ministries and agencies to bend their own resources to these purposes.

Strengthening the policy focus on raising the level of innovativeness of non-technological SMEs

The SME productivity gap is most evident among SMEs in low technology manufacturing sectors, largely due to differences in capital availability, skills and innovativeness. One of the keys to addressing this productivity challenge is to promote innovation more broadly across SMEs in these sectors, with emphasis on innovation in new products, processes, marketing and organisational approaches. This will require a rebalancing of the current policy emphasis on technological innovation that is directed primarily at fostering the R&D activity of high-technology enterprises. In this regard, more SME programme support is needed to address the limited capacity of traditional SMEs to pursue innovative activity and support their efforts to develop innovation-related projects that will improve their productivity and diversification into new products and markets. To improve the innovativeness of SMEs will require attention to skills development, management capacity, business support to assist SMEs to identify opportunities to improve their businesses through innovation (e.g. diagnostic and consultancy services, and access to the financing required to implement innovation, such as for the upgrading of equipment and technology, integration of information and communications technologies and systems, training of employees, etc.). Part of this effort should involve a more coherent strategy to target the innovativeness of microenterprises, which are largely overlooked as generators of economic benefits.

Increasing programme support for new business creation, especially in non-technological fields

Apart from encouraging and supporting high-technology start-ups, government programme support for business creation has been somewhat limited. Although Israel has seen growth in the number of enterprises over the last 10 years, the economy could benefit from a higher level of entrepreneurial activity in the form of stronger and more innovative start-ups (with higher survival rates), which would have a positive impact on productivity improvements in the SME sector and create more jobs. This requires an emphasis on new start-ups that have higher levels of human capital, innovativeness and business/marketing sophistication. New entrepreneurs would benefit from enhanced know-how at the initial stages of business development through better access to entrepreneurship training, mentoring, and management development support. While including a “know-how” component, current SME programmes in Israel do not specifically emphasise policies to foster stronger start-ups as part of the business creation process. A proactive policy approach to ensure widespread access to entrepreneurship orientation and competency-building initiatives, including workshops, seminars, conference events, and mentors, across the population would help create a more informed path into the entrepreneurial pipeline.

Promoting the growth of traditional SMEs

Programme intervention has also been limited with respect to promoting the growth of the typical SME. Since productivity generally increases with firm size, increased productivity in Israel would be promoted by programmes aimed at fostering the development of microenterprises into small enterprises and small enterprises into medium enterprises, especially in the non-technological sectors where the productivity gap is the most severe.

Israel’s SME policy should be more sensitive to the needs of SMEs at various stages of growth and target specific policies and programmes to remove the growth barriers and constraints. This would require adoption of a “pipeline approach” to entrepreneurship and SME policy – targeting entrepreneurship and SME development through the different phases of entrepreneurial activity and business development, i.e. potential entrepreneurs, start-ups, early-stage growth-potential micro and small enterprises, and medium-sized enterprises with the potential for integrating into global markets.

Programmes for the development of young entrepreneurs

Although Israel operates dedicated programmes for immigrants, minority populations and women, there is no special policy focus on the development of young entrepreneurs, as is common in most OECD countries. However, young people face a number of barriers in their efforts to start businesses. These include market failures in the provision of information to young entrepreneurs, lack of work experience and knowledge, difficulty in accessing financial capital, and limited business networks. Policy actions that can be developed to address these barriers include: promoting entrepreneurship skills to address the lack of knowledge and prior work and entrepreneurial experience; providing information, advice, coaching and mentoring during and after start-up; and providing financial support to compensate for the lack of initial capital and difficulty in obtaining financing (OECD/European Union, 2012).

Policy to foster integration of entrepreneurship throughout the education system

Given Israel’s reputation as an entrepreneurial society, it may seem paradoxical to recommend that the SMBA adopt a policy focus on promoting an entrepreneurial culture, but this a particular policy gap in its SME policy agenda at present. One of the key policy approaches to strengthening the entrepreneurial culture is to integrate entrepreneurship throughout the educational system with the aim of promoting entrepreneurial mind sets and entrepreneurship behaviours in the population. Governments in many OECD countries now include this as a policy objective in their entrepreneurship and SME development strategies, but this not one of the stated policy priorities of the SMBA or the Ministry of Economy. Although the Israeli Ministry of Education has ad-hoc initiatives to expose students to future career opportunities and entrepreneurial pathways through linkage with the business community, the national education policy does not put a defined focus on entrepreneurial competence as outcome in curriculum guidelines (OECD/European Commission/European Training Foundation, 2014). In other countries, economy ministries often provide the policy push for integrating entrepreneurship throughout the education system and it is becoming common practice for the ministries and agencies responsible for SMEs and for education to work collaboratively to agree on a plan of action for incorporating entrepreneurship concepts across all levels of the education system, as well as across all disciplines of study.

The SMBA could play a role in promoting the more widespread introduction of entrepreneurship throughout the education system, including vocational training and university programmes on a cross-disciplinary basis, as one of the policy objectives in a new SME and entrepreneurship strategy document for Israel. This policy effort would require collaboration between the SMBA and the Ministry of Education, as well as with the Ministry of Economy unit responsible for vocational training.

Policy delivery arrangements

A number of government and public-supported are involved in delivering entrepreneurship and SME policy supports in Israel (Figure 4.1). These can be categorised by type of policy support: start-up and business development support (non-financial), financing support, access to markets, and innovation support. A number of parallel structures are in place for delivering SME policy supports – one for high-technology enterprises by the IIA (e.g. R&D funds, technological incubators), one for traditional start-ups and SMEs (e.g. MAOFs), and one for Arab Israelis (e.g. MEDA programmes, Nazareth Business Incubator Centre) and immigrant entrepreneurs (Ministry of Immigrant Absorption). However, there is no typology mapping of support programmes and target groups to identify where precise gaps may exist. Overall, it is nevertheless clear that the delivery of policy support is more developed for high-technology entrepreneurs, sectors and enterprises than for traditional start-ups and SMEs.

Policy delivery arrangements refer to the way public programmes are implemented. For example, business development services centres can be managed directly by the government through the recruitment of local officers in charge of the transfer of information and other services to the targeted SMEs, or alternatively the same services can be contracted out by the government to private-sector companies, which deliver them on behalf of the government.

This section focuses on the way key government agencies in SME and entrepreneurship policy in Israel reach out to their clients, namely the SMBA, the MEDA, the Israel Innovation Authority (IIA), the FTA and the Israel Export Institute (IEI), and the Ministry of Immigrant Absorption. Detailed descriptions and assessment of the SME support programmes are presented in Chapter 5.

The SMBA

The SMBA was launched in 2010, following the 2007 government resolution No. 2190, which aimed to simplify and improve the targeting of a range of existing SME support actions. The SMBA was tasked with helping deliver the SME credit guarantee fund with the Ministry of Finance, including in scaling it up and improving its efficiency, with improving the system of business development services to entrepreneurs and SMEs, and with improving policy co-ordination across government and with the private sector.

The SMBA replaced the former Israel Small and Medium Enterprises Authority, which was set up in 1993 as a not-for-profit social partnership between the government, local delivery agents and NGOs to provide business advice and assistance to prospective and existing businesses. The former agency had delivered business development services through 25 MATI business support centres located across Israel delivered by a loose group of NGOs. MATI provision continued until 2013. In 2013, MATI provided conferences, training sessions (4 127 participants), business planning (1 600), the “Initiating a Business” entrepreneurship training programme, and consulting services for entrepreneurs, including microenterprises (7 000 entrepreneurs, most of whom were micro businesses (1-4 employees) with 185 000 hours of consulting).

The government had originally opted for this approach in the belief that an NGO would be closer to the private sector and more able to understand its needs. However, in 2014 the SMBA decided to replace the MATI centre system with a new system of MAOF centres, as the result of a lack of government control and influence over the MATI centre programmes and a poor review of the impact of the MATI centres by the Auditor General, which found variable levels of quality and consistency in their support services. An SMBA survey run in 2011, for example, had found that 70% of MATI clients did not believe that they received quality support from them. The new MAOF structure aims to create national quality standards for services and assistance to entrepreneurs and SMEs, with a standardised delivery of services.

The main objectives of the MAOF centres are to increase the survival rate of businesses, improve SME productivity, accelerate SME growth, and meet the needs of minority-owned SMEs. To do so, they employ 120 staff members and have an annual budget of NIS 65 million, which is similar to the budget made available to the previous MATI system. Through this budget, the SMBA expects to serve about 12 000 entrepreneurs and SME owners each year. The range of MAOF services is also very similar to that offered under MATI, focused on government-funded training for new entrepreneurs and early diagnostic and management support services for SMEs, including referral to other relevant government services and consultants. Some co-operation exists between the SMBA, MEDA and the Ministry of Immigrant Absorption in delivering MAOF supports to marginalised groups and this is promoted through additional MAOF funding to the SMBA to serve these target groups.

The SMBA has also improved delivery of policy supports to peripheral regions by setting up MAOFs in areas of the country not previously served by the predecessor MATI network. However, the development of more support infrastructure is likely to be needed in these regions. This is particularly the case in Arab Israeli communities where SMEs and entrepreneurs lack access to adequate premises to start and operate their businesses. It will be important to support the development of industrial zones and non-technological business incubators in more peripheral regions to improve access to start-up facilities and capacity building resources.

To improve visibility and co-ordination compared to the previous MATI system, the SMBA also set up an integrated web-based information, guidance and signposting service to nascent and existing entrepreneurs (see Box 4.5).

Box 4.5. SMBA’s One-Stop Shop SME programme information service

One of the challenges facing entrepreneurs and existing small firms is finding information that will guide them on ways to navigate government regulations, get help and assistance both from the government and outside support, and receive practical advice that will lead to business development. The SMBA website (www.sba.economy.gov.il) provides an integrated, comprehensive ‘one-stop shop’, backed up by a mobile phone app and its own Youtube channel, that provides nascent and existing entrepreneurs with the following:

Information: regular updates of government schemes, events and notices, the opportunity to join the mailing list, and a Facebook page.
Guidance: guides to legal issues (e.g. issues involved in incorporation, partnerships, lease agreements), marketing and sales (e.g. marketing plan), accountancy issues (e.g. compliance issues with the government). The website also offers practical business plan calculators that help entrepreneurs estimate production costs, start-up costs and cash flows).
Signposting: offers links to MAOF local centres, links to other support providers (e.g. Israeli Chamber of Commerce) and a detailed and comprehensive search engine providing information on governmental and non-governmental finance and advice schemes.

Source: Website of the SMBA, sba.economy.gov.il, and information submitted by the SMBA to the OECD

The SMBA manages its two major SME and entrepreneurship support programmes, the MAOF centres and the SMBF, via intermediary organisations. This helps the SMBA deal with the scale of the operations needed on the ground but also requires an effective system of performance monitoring and control of the intermediaries so that they deliver the services appropriately. In the case of the SMBF national loan guarantee scheme, the SMBA and the Ministry of Finance have set up service-contract agreements with two independent companies to undertake the first screening of loan guarantee applications from SME applicants before sending them on to partner banks (if approved to go to the second stage). The delivery of this Israeli programme is very labour-intensive, since all guarantee decisions are made on an individual applicant basis and an extensive amount of screening and due diligence is necessary before the file is even transferred to a bank for review. The rationale for this approach is that Israeli SMEs do not have a high level of financial literary, keep inadequate accounting records, and lack the capacity to produce bankable financial proposals. Out-sourcing the management of the programme to private sector companies relieves the SMBA of having to perform these functions but it does come with high programme administrative costs. The operation of the MAOF centres is contracted out to five private sector intermediary organisations selected by the SMBA through a competitive tender process to run parts of the network under service-management agreements in five different regions of the country.

The choice of the SMBA to use intermediary organisations for the delivery of its main support programmes comes with both pros and cons. The main advantage consists in staffing economies and relief from burdensome administrative and management tasks. Clearly, if the SMBA were to manage the SMBF applications and the MAOF centres directly, it would have to hire large numbers of local officers and put in place an internal system of control and management to monitor their work on a daily basis. By contracting out, the SMBA manages to reduce staff costs and to focus on more strategic work related to SME and entrepreneurship policy. However, the outsourcing choice also has some disadvantages, such as less control on the everyday activities of the SMBF and the MAOF centres and loss of continuity if contracting companies do not perform well and need to be replaced, possibly causing a disruption in the delivery of services.

Systematic monitoring and evaluation is a very important tool for operating a system of intermediary organisations effectively. The SMBA is already engaged in an evaluation of the SMBF, which should provide useful information to help adjust the management of the programme if necessary. In parallel it should also implement a system for monitoring and evaluating the MAOF centres. An appropriate system for monitoring the allocation of funding by type of services and firm size is already in place together with monitoring of operational guidelines and quality standards. In addition, the SMBA will have to implement an assessment of the real impact of the centres on their beneficiary SMEs and entrepreneurs. This will require setting clear objectives for each of the programmes managed by the MAOF centres to evaluate whether the objectives are met, whether MAOF-supported companies do better than others, which support programmes have a stronger impact, and whether certain centres and the intermediaries that manage them do better than others.

The importance of evaluation has already been recognised by the SMBA (see Box 4.6), but there is still scope for spreading its evaluation work more widely. The same approach to impact evaluation is required for other SME policy supports, such as the SMBF, the IIA innovation policy measures, the export promotion policies, MEDA programmes, and entrepreneurial activities of the Ministry of Immigrant Absorption.

Box 4.6. Evaluating entrepreneurship and SME policies and programmes

The SMBA has not yet established a formal process to systematically evaluate the effectiveness and impact of all SME and entrepreneurship policies and programmes, although the SMBA strategy of 2011 made several recommendations with respect to monitoring and evaluating the effectiveness of SME support (Adalya Economic Consulting, 2011). These recommendations included:

Consulting with international SME programme evaluation experts and organising workshops on the topic with the involvement of such experts.
Creating an annually-updated statistical database with relevant segmentations for monitoring the status of SMEs (e.g. the distribution of businesses by turnover range, number of employees, economic sector, location, and export activity) in collaboration with the Central Bureau of Statistics.
Creating, managing and maintaining an electronic database of entrepreneurs and businesses that receive aid from any of the relevant government organisations and agencies. This will assist in preventing duplication, monitoring the take up of assistance from different programmes, cross-checking the assistance received by any business or entrepreneur, and more effectively monitoring and evaluating the SME support system.
Carrying out surveys and studies based on reliable information about businesses and entrepreneurs receiving assistance (including satisfaction surveys, surveys designed to test the effectiveness of certain devices, etc.).
Identifying performance indicators for each of the individual support programmes.
Periodically conducting a telephone survey of businesses (at least once every three years) so as to receive empirical data on trends in SME development, barriers and needs.
Conducting satisfaction surveys (quarterly/semi-annually) among a representative sample of businesses and entrepreneurs who received services from the SMBA. Satisfaction surveys can be a useful indicator of the current level of success in delivering a proper level of service to SMEs in business development services centres, provided the surveys are carried out consistently and use the same format over time.

Moving ahead in constructing these databases would provide a framework for setting appropriate indicators of success that would enable the SMBA to draw conclusions about SME and entrepreneurship support programmes and to conduct to better inform and update policy. To date, this work has not been completed, but it is essential to the proper evaluation and management of SME and entrepreneurship support programmes.

Source: OECD based on OECD (2007), OECD Framework for the Evaluation of SME and Entrepreneurship Policies and Programmes, OECD Publishing, Paris.

The MAOF centres also rely on a wide network of external consultants who receive referrals of SMEs and entrepreneurs from MAOF centre staff. The SMBA has created and keeps up to date a database of approximately 850 private consultants with expertise in legal, financial and business operation fields. The use of external consultants is in principle a reasonable choice as it will contribute to creating a market for private sector business support services in Israel. However, it is important that the consultants in the system are appropriately skilled and have appropriate incentives. The SMBA will need to ensure that the private consultants are able to supply high-quality services and that SME clients actually benefit from consultancy interventions. This can be achieved, for example, through client satisfaction surveys and follow-up on the quality of specific consultancy assignments. Upgrading the skills and knowledge of MAOF business advisers is also critical because their advisers make key referral decisions about what types of support are available either from the government or other support providers. This support landscape is fluid and without up‐to-date support, business advisers may be ill-equipped to provide their clients with credible and accurate support.

In addition, it is important that MAOF staff members are properly trained to provide appropriate early business diagnostic analysis, are knowledgeable about existing government support programmes and services, and are fully familiar with experts and advisors in the SMBA database. MAOF staff members must therefore be properly trained and up-to-date with existing programmes and expertise available in the market for consulting services.

The Authority for Economic Development of the Minorities Sector (MEDA)

The Authority for Economic Development of the Minorities Sector (MEDA), which moved to the Ministry of Social Equality in 2015, delivers a range of policies for SME and entrepreneurship development by ethnic minority populations in the country, namely the Arabs, Druze and Circassians, which are under-represented in the entrepreneurial population. It delivers a number of programmes to SMEs and entrepreneurs as part of this mandate. It provides business advice and training to new and potential new entrepreneurs from minority populations through four business centres and an industrial incubator. In the area of access to financing, it contributes funding to the SMBF to facilitate the allocation of loan guarantees to minority-owned SMEs, co-operates with an NGO to make micro-credit available to Arab Israeli women interested in setting up a business and has launched an investment fund to provide equity finance to promising Arab-owned enterprises. Finally, it organises entrepreneurship awareness-raising events for youth in minority communities and operates the Tevel export programme for minority enterprises in close partnership with the Ministry of Economy and Industry’s FTA and the IEI.

The Israel Innovation Authority (IIA)

The Israel Innovation Authority (IIA), housed in the Ministry of Economy and Industry, oversees all government-sponsored R&D support. The IIA replaced the Office of the Chief Scientist (OCS) in January 2016, by virtue of major amendments to the 1984 R&D Law. The IIA oversees more than 30 R&D and innovation support programmes, one of its main programmes being the “R&D Fund”, which provides R&D grants to businesses at various development stages, including for high-technology start-ups and a track for businesses in traditional industries. Supported projects are funded annually, with funding confirmed if the projects meet the agreed milestones.

The IIA also oversees 18 technology incubators, which offer technical expertise, seed funding and network opportunities to high-technology start-ups. The Technological Incubators Programme has been in place for many years, initially with 24 incubators operated by the Office of the Chief Scientist. As part of a reform process that began in 2011, Israel’s technology incubators are today organised as public-private partnerships, with the incubator hosts selected by the IIA through a competitive call for proposals. Successful applicant firms receive an eight-year license by the IIA that gives the winners the right to establish an incubator and submit funding applications to the IIA in support of each incubating enterprise. Of the NIS 2 million specified for each incubated enterprise, the IIA provides 85%, with the remaining 15% invested by the license holder. The license holders must make a minimal commitment of NIS 50 million for the incubator license, which provides assurances that the operator has the capability to support incubated companies further down the line. The licenses are often held by venture capital companies and technology development companies that can bring a wealth of knowledge, international exposure, capital and networks to enhance the chances of success of the incubating start-ups. This new model has attracted global interest from other countries.

The Foreign Trade Administration (FTA) and the Israel Export Institute (IEI)

The Ministry of Economy and Industry’s Foreign Trade Administration (FTA) is the main agency for export promotion in Israel. It directly manages Israel’s main export promotion funds, such as the “Smart Money” Programme for encouraging access by Israeli firms to overseas markets and the India-China Fund to help Israeli firms gain access to these emerging economies. The Israel Export Institute (IEI) is an important partner for some of the FTA’s activities through the provision of coaching, mentoring and technical assistance to the FTA-supported firms with respect to, inter alia, participation in international trade fairs, identification of local agents and distributors and compliance with international industrial standards.

Ministry of Immigrant Absorption

Finally, the Ministry of Immigrant Absorption has established its own network of business centres and entrepreneurship counsellors to assist new immigrants and returning residents in starting and developing their own businesses. The Ministry of Immigrant Absorption also provides financial support for the establishment, acquisition and expansion of immigrant-owned small businesses, for example through the Self-Employed Immigrant Fund, which offers preferential start-up loans (up to NIS 125 000) to self-employed immigrants and returning residents. Some of these activities, notably those of the business information centres and counsellors, are very similar to those of the SMBA’s MAOF centres, although the Ministry does co-operate with local MAOF centres to deliver subsidised consultancy and mentoring support to its immigrant clients to help in preparation of a business plan and launch of the business. Nonetheless, greater synergies should be nurtured between these two government entities on their SME and entrepreneurship support activities.

Conclusions and policy recommendations

The importance of SME and entrepreneurship policy is duly recognised in the Israeli economic policy agenda. For example, SME development is one of the main stated objectives of the Ministry of Economy and Industry, and many other government ministries and agencies have relevant actions for the support of SMEs and entrepreneurs. Furthermore, the SMBA has been created to strengthen business development services and SME access to finance and improve government regulation of SMEs and entrepreneurship.

However, the SMBA is currently lacking a full set of formal structures to formulate strategy and co-ordinate government actors around SME and entrepreneurship policy priorities. In particular, there is no comprehensive and integrated national SME and entrepreneurship policy strategy and no inter-ministerial SME and entrepreneurship policy committee or working group. In a more fully developed, adequately resourced, and legislatively reinforced authoritative role, the SMBA could address these deficiencies by ensuring that SME and entrepreneurship policy meets the market needs and government priorities, and bringing SME and entrepreneurship policy together across government.

Although the SMBA co-operates with MEDA and the Ministry of Immigrant Absorption on delivery arrangements for SME support to Arab Israeli and immigrant groups through the MAOF network, the existence of parallel support structures reinforces the need for more formal co-ordination of the system of supports by the SMBA, which has the mandate for co‐ordination of all organisations involved in promoting the SME sector. An SMBA working group on SMEs and entrepreneurship could play an important role in co-ordinating the disparate structures, strengthening collaboration where appropriate to reduce fragmentation, duplication and overlaps, and identifying gaps that partnerships could best address.

The SMBA can also play a stronger role in delivering business development services to SMEs and entrepreneurs. In doing so, its management of intermediary organisations could be strengthened by increasing its monitoring and evaluation of the intermediaries and the training of their staff.

The following key recommendations are offered to strengthen the strategic planning of SME and entrepreneurship policies and improve their coordination and implementation:

Key recommendations on the strategic framework and policy delivery system

Prepare an overarching medium-term national SME and entrepreneurship strategic policy, presented in a stand-alone document, which outlines the vision, objectives, priority pillars, target groups, and lines of action across government.
Create an inter-ministerial SME and Entrepreneurship Policy Committee, with SMBA as its secretariat, and an inter-ministerial Working Group on SME and Entrepreneurship Policy, led by the SMBA and consisting of SME focal points from relevant ministries and agencies.
Set up a framework of formal consultation forums with SMEs and entrepreneurs, co‐ordinated by the SMBA, to solicit their opinions and input on government regulations and policies.
Conduct an analysis of the current and future staffing and budget requirements of the SMBA and consider strengthening its resources. Strengthen the legal authority of the SMBA by making it a full-authority SME agency.
Match the SMBA’s three-year strategies with a multi-year funding commitment from the Ministry of Finance.
Ensure that MAOF staff members are fully trained in providing diagnostic and referral services, including deep familiarisation with support programmes offered by other government departments and agencies and the competencies of consultants in the SMBA database.
Implement a system for regular monitoring of the quality of services being delivered by each MAOF centre and their adherence to specified performance standards. Carry out evaluations of the impact of MAOF services on performance outcomes of clients using robust control group methodologies.
Implement an evaluation system for monitoring the take-up by SMEs and entrepreneurs of policy measures across government entities, identifying performance indicators for each support device, and measuring the impact of each policy measure against these performance indicators.
Establish a co-ordination mechanism for policy support structures, led by the SMBA, to foster communication and exchange among all entities delivering SME and entrepreneurship supports for the purpose of achieving greater collaboration and economies of scale. This could be done within the framework of a Working Group on SME and Entrepreneurship Policy.
Undertake an assessment of the mix of the portfolio of SME and entrepreneurship programmes by programme type and enterprise target group, including contrasting expenditures and outcomes by technology and non-technology entrepreneurship. Based on the results of this assessment, increase programme support for traditional start-ups and SMEs, including programmes for non-R&D based innovation, new business creation in non-technology fields, promoting the growth of traditional SMEs, supporting young entrepreneurs and promoting entrepreneurship in the education system.

References

Adalya Economic Consulting (2011), Strategic Report of Israeli Governmental Assistance to Small and Medium Businesses – Phase A, submitted to Small and Medium Business Agency, November, Tel Aviv, Adalya Economic Consulting.

European Commission (2008), Think Small First, A Small Business Act for Europe, Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions, 25 June, Brussels, European Commission.

OECD/European Commission/European Training Foundation (2014), SME Policy Index: The Mediterranean Middle East and North Africa 2014: Implementation of the Small Business Act for Europe, OECD Publishing, Paris, https://doi.org/10.1787/9789264218413-en.

OECD/European Union (2012), Policy Brief on Youth Entrepreneurship, OECD Publishing, Paris.

OECD and UNIDO (2004), Effective Policies for Small Business: A Guide for the Policy Review Process and Strategic Plans for Micro, Small and Medium Enterprise Development, Paris: OECD.

OECD (2007), OECD Framework for the Evaluation of SME and Entrepreneurship Policies and Programmes, OECD Publishing, Paris.

OECD (2000), The Bologna Charter on SME Policies. OECD, Paris, Available online at www.oecd.org/cfe/smes/thebolognacharteronsmepolicies.htm.

Senor, D. and S. Singer (2009), Start-up Nation: The Story of Israel’s Economic Miracle, Toronto, Canada, McClelland & Stewart

Small and Medium Business Agency (SMBA) (2014), “English Translation of the Hebrew text of the SME Bill”, unpublished document.

Notes

← 1. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

← 2. This budget included NIS 90 million for SME training programmes, NIS 60 million for entrepreneurship training programmes, NIS 55 million for the establishment of private equity growth funds (new in 2015), and NIS 10 million for other SME support programmes.